Fresh Fields Case Analysis

I. STATEMENT OF THE PROBLEM

• What must Fresh Fields do to take on the challenges that may come?

II. OBJECTIVES

• To identify the factors that led to the success of Fresh Fields

• To provide an analysis on the positive and negative factors affecting Fresh Fields in the business environment

• To recommend ways and means that can help sustain growth of Fresh Fields

III. AREAS OF CONSIDERATION

A. Fresh Fields

• It’s been described as an old-fashioned neighborhood grocery store, an organic farmer's market, a European bakery, a New York deli, and a modern supermarket all rolled into one

• Fresh Fields was founded by a team of entrepreneurs including:

Mark Ordan вЂ" CEO and President

• 33 years old

• A former Goldman Sachs investment banker

Leo Kahn вЂ" Chairman

• 75 years old

• The founder of “Staples”, the famous office supplies store

Jack Murphy вЂ" Chief Operating Officer

• 44 years old

• A former manager of the Heartland Supermarket chain in New England

• Founded in 1991, Fresh Fields opened at least 14 stores in four states by mid 1994. More stores for opening are in the planning stages

• Not your ordinary supermarket - offers organic and conventional produce, meats, seafood, dairy products, baked goods from an in-store bakery, deli items, natural health care products and environmentally friendly household goods

• When in season, Fresh Fields’ locally grown organic produce can even cost less than produce sold at other markets

• Premium over other (non-produce) goods is approximately 5%

B. Management

• Employees are considered associates.

• Builds good relationship with consumers and buyers

• In addition to supporting and promoting health and well-being, Fresh Fields stores are also active participants in their communities. Each year they give back 5% of their after tax profits to local nonprofit organizations.

C. Suppliers

• Must use natural methods of pest management and apply the least amount of agricultural chemicals

• Small meat and poultry farms who avoid growth promoting drugs often used by factories.

• Seafood that is sold in Fresh Fields is caught in clean and deep waters.

D. Environment

• In 1992, a survey by Health Focus showed that 90% of Americans sat that health has become a major factor in deciding what kind of food to buy

• At this time, Americans were willing to pay up to 20% more for natural foods

• Since the early 1990s, certified organic acreage has increased as producers strive to meet increasing demand for organic agricultural and food products in the United States. The dramatic growth of the industry spurred Federal policy to facilitate organic product marketing, and led to new government activities in research and education on organic farming systems.

• A trade publication, the Natural Foods Merchandiser (NFM) reported that total organic sales through all marketing outlets rose steadily from about $1 billion in 1990 to $3.3 billion in 1996.

Major Assumptions

• Fresh Fields is a small company compared to supermarket giants such as Wal-mart

• Fresh Fields have a good relationship with its stakeholders (suppliers, consumers and stockholders)

• There is enough capital for research and development, and expansion.

• Total Quality Assurance is maintained by the company

SWOT Analysis

Strength

• Fast growing market for organic foods, supported both by market demand and U.S. government initiatives.

• Good relationship with suppliers and customers

• Known for delivering quality goods

• Profitability of the company is steadily increasing

Weakness

• Organic food production is not as common as mainstream food production. This makes it more costly and it has less market penetration.

Opportunities

• Not only can Fresh Fields grow organically but through mergers/acquisitions as well. As a well established chain and brand name they can spot smaller, value-added organic food shops/chains in other locations and buy them out.

• They may also consider merging with an even larger health food chain adding value to their customers and shareholders.

• Information technology is widely available (ex: internet)

Threats

• Since the demand is growing, there will inevitably be new entrants to the market. Fresh fields will have to consistently be on top of the organic food market game to stay ahead.

• Suppliers may sell directly to consumers

IV. THEORETICAL FRAMEWORK

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